The Value of a Statistical Life Under Changes in Ambiguity

Han Bleichrodt, Christophe Courbage and Béatrice Rey ()
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Christophe Courbage: HES-SO - University of Applied Sciences and Arts Northwestern Switzerland
Béatrice Rey: GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique

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Abstract: The value of a statistical life (VSL) is a key parameter in the analysis of government policy. Most policy decisions are made under ambiguity. This paper studies the effect of changes in ambiguity perception on the value of a statistical life (VSL). We propose a definition of increases in ambiguity perception based on Ekern's (1980) definition of increases in risk. Ambiguity aversion alone is not sufficient to lead to an increase in the VSL when the decision maker perceives more ambiguity. Our results highlight the importance of higher order ambiguity attitudes, particularly ambiguity prudence.

Keywords: smooth ambiguity model; prudence; neoadditive preferences; Value of a statistical life; ambiguity (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-rmg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01943887
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Related works:
Journal Article: The value of a statistical life under changes in ambiguity (2019)
Working Paper: The value of a statistical life under changes in ambiguity (2019)
Working Paper: The Value of a Statistical Life Under Changes in Ambiguity (2018)
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